John Paulson Says BofA Stock May Double By Dec. 2011

In a letter to his clients, investing guru John Paulson, best known for making billions from bets on the collapse of the subprime mortgage market, told investors shares of Bank of America (BAC) may double in the next two years as writedowns ease.

According to a quarterly letter to clients, a copy of which was obtained by Bloomberg News, Paulson says banks “will have passed the current writedown cycle and have visibility for growth in 2012.”

While the shares of Bank of America “[have] risen from when we purchased the stock, we believe considerable upside remains,” Paulson writes in the letter.

Paulson’s investment moves are closely monitored by investors. The latest quarterly filing by his hedge fund Paulson & Co. showed the fund owned 159,794,229 common shares of BofA –ranked first by assets and deposits in the U.S — down from 167,990,464 shares. He said while the fund is up on its investment in Bank of America “considerable upside remains.”

Among other banks stocks, in the quarter ended September 30, Paulson also accumulated 300,000,000 million shares of Citigroup (C) for about $1.5 billion, he dumped his $328 million stake in Goldman Sachs (GS), and also sold off a portion of the $2.2 billion stake he held in Bank of America earlier this year.